How Can I Live In An Expensive City For Cheap?

In this episode, I talk about living in an expensive city for cheap.

Full transcript:

John: Hey, John Sonmez from simpleprogrammer.com. I got a question about—another question about my book. If you haven’t seen it already, keep on plugging it, but Soft Skills: A Software Developer’s Life Manual. Here I talked about some kind of career strategies and one of them I talked about is living in an expensive city.

I got this email from Britney and Britney says, “Hi John, I’m reading your book Soft Skills and you mentioned moving to San Francisco or New York for the salary increase Chapter 53, page 324. I currently walk as a”—you walk? No. I currently work. That’s me reading it wrong. “I currently work as a software developer in Seattle. Could you offer any insights on how one can live near San Fran or New York City, expensive cities cheaply? Specifically I’m talking about New York City my girlfriend is a native New Yorker and she desperately wants to move there. I worry about how expensive it is. I’m also looking into working full time and going to school for an online part time CS degree at Oregon State. I already have a BA in History of Science from Princeton. I don’t want to make any silly financial decisions. Finding a job in New York City, the cost of living, long commutes and going to school part time feels really overwhelming to me. I really appreciate your help and insight. I love the book and recommend it to all my friends. Warm regards, Britney.”

Britney, this is interesting. I’ve actually had a couple of people ask about this. In the book I recommend that like one thing that I would do if I were starting out in my software development career like early on is I would move to either New York City or San Francisco where I could get a lot higher pay. Those are probably the highest paying cities in the US at least for software developers and what I would is try to live cheaply in those cities.

The idea behind this is that if you can—I’ll just throw some fake numbers out here for what a software developer might get paid. Let’s say that you’re somewhere just general US, Midwest, maybe a software developer might make like $80,000 or $100,000 as a senior level developer in general US, but if you go to San Francisco in the San Jose area and work in the startup where it’s really expensive there you might be able to get a salary like $180,000 a year or maybe even $200,000. That’s not unheard of. In New York City if you work in the financial industry as a software developer there are software developers that make several hundred thousand, $300,000, $400,000 a year in the financial industry, get bonuses and it’s not unheard of for certain very technical like software developers working on trading algorithm software to get bonuses and make millions of dollars just like Wall Street business people make from there. There’s some lucrative opportunities in either of those cities.

Now, the idea is if you can live cheaply in one of those cities what you can do is you can benefit from the increase in salary which might be twice the salary that you can make somewhere else but if your cost is less than twice then you’re going to come out ahead and way ahead over a long period of time. If you think about 10 years in the Midwest somewhere making $70,000, $80,000 a year salary with a low cost of living compare that to you move to New York City and you make twice that amount and you still maintain a somewhat low cost of living you’re going to be able to stash a lot of cash in that period of time. If you invest that well you’re going to do a lot better.

That’s why I always recommend that if you have that option of doing that. Then the question comes to how can you live in those cities cheaply? Well, in general, again, I don’t want to go too far here, but in general salaries tend to track the cost of housing in those areas. That usually is buying a house. There are other options. You don’t have to buy a house in one of those areas. What you could do is you could rent, but more specifically what I would recommend is renting a room or getting a roommate. That’s a really good way to cut your cost way, way down.

I mean obviously you could live in suburb areas. It depends. New York City is probably better for that because you can take a train in, you can take a subway in, so you could be further out and you don’t have to drive. The nice thing about not having to drive is that you can do something during that time. If you live somewhere where you have to like—an hour and a half like 2-hour commute where you’re driving that sucks because you can’t actually work. You can’t actually do anything productive. You just have to sit there and drive and maybe listen to audio books. That’s one of the key things that I would consider.

If you’re going to think about moving to New York City honestly I would try to live merely as possible. The biggest thing is the reason why the salaries are so high in those expensive cities is because of housing cost primarily. If you can reduce housing cost, if you can get a roommate, if you can sublet something, if you can rent a room a lot of times you can rent a room in one of these expensive cities for a few hundred dollars a month which might actually be cheaper than you’re paying to rent like a house or rent your current apartment in a much cheaper city. Look into things like that.

It’s going to require some kind of a sacrifice obviously, you’re not going to have as big of a place and it might not be as central, but if you can do something like that or you can live in the suburb area there’s ways around it, right? All you have to do is make sure that if your salary goes up 200% that your housing doesn’t go up 200%. If your salary goes up 200% and your housing goes up, if you can keep it the same at 100% but you downsized to a smaller place, you have that option in a lot of those cities, that’s good. Or maybe if your housing cost goes up to 150% that’s good as well. You’re still going to come out way ahead.

That’s why I give that advice. It’s not for everyone. If you’ve got 5 kids you’re probably not going to be able to reduce your housing cost if you live in New York City or San Francisco. You’re probably just not going to be able to do it. It’s not going to be an advantage for you. You’re probably actually going to be better off in the Midwest. It’s probably going to work the other way for you.

That’s that. Hopefully that helps you to make a decision. Just look at it. Just look and calculate out. Figure out how much more money you think you’ll be able to make in one of these expensive cities. Figure out how cheaply you might be able to live in one of these cities and see what the difference is. If you’re going to be able to put away an extra $20 or $30,000 a year that could be worth the sacrifice. That could be worth it. The benefit of that even if you do buy a house is a lot of people if you could afford that if you buy a house in San Francisco or New York City area and you start your career there if you’re just starting out and you work for 10 years or 20 years or whatever, when you retire and sell your house now you’re going to be able to move somewhere a lot cheaper and you’re going to have a lot of money. It’s going to go really, really far. That’s another strategy that you could do. It works for people that are just starting out. It’s not going to work if you’re already 15, 20 years in your career. You’re not going to have enough time to be able to pull something like that off.

Anyway, great question. Thanks for asking Britney. Hopefully that answer helped you and hopefully you figure out what you want to do. Thanks again for watching these videos. If you’d like to subscribe, go and click that subscribe button right after this. Take care.